W9's and W8's as a Broker

TransAction

Active Member
15
Hi All,

We have a situation where I hope someone here can assist me regarding the requirements for W-8's and orW-9's for freight brokers.

We have a new customer who is located in Toronto who has awarded us mulitple truckloads per year from the USA. Our office received an email from a freight consultant / audit company they use asking us for our W-9. We explained to them we are an intermediary, we are located in Canada, our customer is located in Canada and the carriers we are hiring our Canadian so there is no US tax involved here so not necessary.

They then came back to us and said we then need a W8 BEN. When we looked at this for it says do not complete if:
- You are NOT and individual
- You are a person acting as in intermediary

We sent them this info and then they came back with:
"- You are not an individual (It says you will need to complete a W-8BEN-E)

- You are a person acting as an intermediary (Our freight payments will go directly to you, so we do not consider you an intermediary. If this is your stance, it states you will need to provide a W-8IMY)"

Can anyone enlighten me on this matter?

Thanks!
 

loaders

Site Supporter
30
We have completed the W8 BEN many times. You put Canada (or Canadian, I can't remember) where it asks for what tax treaty you're claiming. The purpose of these forms is not so much to identify you with the IRS, but for the customer to prove to the IRS, that they are not required to withhold tax from your payment. Although as a broker, you are an intermediary, you are not as far as the IRS is concerned. If you are submitting an invoice for payment to a US company, and the cheque will be issued to your company, then you are a beneficial owner.
 

loaders

Site Supporter
30
I just checked our files to confirm what I had posted, and the correct form is W-8BEN-E. The section is Part 111 Claim of Tax Treaty Benefits,(14a, 14b and Line 15) and you are claiming Article V11 (7) at a rate of 0% on "business profits". You must also state that your company has "no permanent establishment in the United States "as the reason the beneficial owner meets the terms of the treaty article". Sorry for the confusion, but this was the recommendation of the legal adviser to one of our largest US based customers, and if it made them happy, I'm sure it will work for you customer.
 

TransAction

Active Member
15
I just checked our files to confirm what I had posted, and the correct form is W-8BEN-E. The section is Part 111 Claim of Tax Treaty Benefits,(14a, 14b and Line 15) and you are claiming Article V11 (7) at a rate of 0% on "business profits". You must also state that your company has "no permanent establishment in the United States "as the reason the beneficial owner meets the terms of the treaty article". Sorry for the confusion, but this was the recommendation of the legal adviser to one of our largest US based customers, and if it made them happy, I'm sure it will work for you customer.
This worked! Thanks for your help on this, greatly appreciated! Do you guys have trucks or just brokerage?
 

theman

Well-Known Member
20
The requirement for W-9 or W-8 has nothing to do with being a broker or a carrier. It is for any business that does business with American companies. A W-8 is for foreign corporations, a W-9 is for American corporations. Because we are legally based in the USA, we file W-9's. It is a common request.
 

TransAction

Active Member
15
I get it now. Been doing this for 17 years and have not been asked about it yet. The only time I have seen these is when carriers send over their paperwork so I assumed it was for carrier's who operate intra USA also. Thanks again for everyone's help on this!
 

loaders

Site Supporter
30
TransAction, we are a stand alone brokerage. Many years ago, in a galaxy far, far away, I was involved in an asset based trucking operation and prior to that, a full maintenance truck leasing company. As theman said, it is a very common and harmless request, especially if you want to be paid for your work!
 
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